A car lot will usually not let you get passed one month overdue before putting the car out for repossession. A car lot will do this because in most cases the buyer has much worse credit or had a riskier past. A car lot will charge the maximum interest allowed in most cases as well. It is a clear scenario of taking advantage of a problem buyer. You can look at it that way or you can look at it in a way the buyer really didn’t any choices to begin with. A car lot will put out the repossession order without letting the buyer know. It will usually get the car back and then speak to the buyer about what can be done to get the car back.
In my time doing repossession for car lots, some people would get repossessed over and over and continually pay the repo fee and be back in the car the next day. My question is why or how can the pay the high repo fee, plus the car payment so easily when the car gets repo’d when they could have paid less then half of that money to keep it current? Ok perhaps the first time, they didn’t realize the car would be in repo status so fast. But when it goes into repossession more times you would think the buyer would learn and save a 300 repossession fee plus whatever else they charge to get the car back.
A bank does things much differently. A bank will call the loan holder over and over and over. They have an arsenal of telephone people in the loan department, they can even set automatic calls for however many times a day they want, sometimes as much as five. At least you get to keep driving the car in that time. Answer the phone, make a promise to pay the following week or month. The bank really wants you to keep the car, they want their interest and late payments. Now they really love those late payment fees. If they take the car, they have to liquidate it for pennies compared to even the interest the buyer will pay. People that finance through banks have a much bigger head start in figuring out how to hide the vehicle. They also usually tell the buyer they are coming making them well aware of the repossession order. Also a bank is more lenient in making a deal, possibly adding two late payments to the end of the loan.
While both have advantages, the bank is clearly the better choice on many fronts. Just for some people a bank loan is not possible given the previous credit problems.